only absolute way to avoid the use of debt, in the first place, is to have a financial
plan prepared at the beginning of each year that does not allow for the use of
debt, and that you will stick to through self-discipline.
major problem most people face is how to get out of the debt that they are already
in. there are only two ways to get out of debt after making the decision to avoid
the use of debt: Examine the assets you have to see which ones could be sold in
order to reduce debt; and in the absence of assets to sell to eliminate debt,
set up a repayment schedule and strictly adhere to it.
that may be sold are investment assets, the liquidation of savings accounts, and
perhaps even borrowing from the cash value of life insurance at a lower interest
rate rather than what is being paid on credit card and consumer debt.
determining which assets to sell in order to reduce debt and be debt free, remember
that the assets sold should have a lower yield or appreciation rate than the debt
- the hard way
Not everyone has the luxury, however, of selling assets to repay debt. Many of
you are perhaps deeply in debt and have no assets at all. In fact, statistically,
80% of Amercians owe more than what they own; therefore, selling assets is not
an option. The only option, then - other than receiving an inheritance or striking
oil - is the slow, painful, and difficult process of making monthly payments.
You must decide, first of all, not to take on any more debt, and second, to set
up a schedule of debt repayment.
of the other keys to repaying debt is to precommit any extra income or amounts
from reduced expenses - in other words, excess cash flow - to debt repayment.
your loan interest as well as your compounding interest with our calculators.
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